Support for Small Businesses
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides more than $376 billion in aid and relief to workers and small businesses under economic stress from the COVID-19 pandemic. The Paycheck Protection Program and Health Care Enhancement Act extended support for small businesses under the CARES Act for the Paycheck Protection Program and Emergency Economic Injury and Disaster Loan Grants. Click here for more information from the House Committee on Small Business. The Paycheck Protection Program Flexibility Act of 2020 modifies some of the central provisions to the Paycheck Protection Program (PPP), allowing more flexibility for borrowers. The bill increases flexibility and access to PPP loans by providing small businesses more time to spend loan funds and still obtain forgiveness.
- The program provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. You can find more information here and a complete list of lenders here. For comprehensive directions on applying for PPP funding, click here.
- PPP has forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees, and at least six months of deferral with maximum deferrals of up to a year.
- Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls.
Improvements to PPP under the Paycheck Protection Program Flexibility Act of 2020:
- Businesses now have 24 weeks to spend loan proceeds, up from 8 weeks;
- Reduces mandatory payroll spending from 75% to 60%, allowing additional funding for rent/ personal property leases, utilities, mortgage interest, and interest on other debt;
- Extends the forgiveness period from June 30 to December 31, 2020;
- Time to pay off the loan has been extended to five years from the original two years for new loans;
- Borrowers can obtain loan forgiveness and utilize the payroll tax deferral.
Paycheck Protection Program’s Loan Forgiveness
- If used for certain costs, the loan provided through the Paycheck Protection Program will be eligible for loan forgiveness.
- Specifically—if the employer maintains its payroll—then the portion of the loan used to cover (1) payroll costs, (2) interest on mortgage obligations, (3) rent, and (4) utilities would be forgiven.
- The CARES Act provides funding for grants to SBA resource partners, including Small Business Development Centers and Women’s Business Centers, to offer counseling, training, and related assistance to small businesses affected by COVID-19.
- Funds will also be provided for the Minority Business Development Agency to provide these services through Minority Business Centers and Minority Chambers of Commerce.
- The bill expands the number of organizations eligible for SBA’s Economic Injury Disaster Loans (EIDL).
- These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 for an SBA Economic Injury Disaster Loan (EIDL).
- The advance does not need to be repaid under any circumstance and may be used to keep employees on the payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions or pay business obligations, including debts, rent and mortgage payments.
Small Business Debt Relief
- This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans.
- Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months.
- This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
The City of La Quinta has established a $1.5 million COVID-19 Small Business Emergency Economic Relief Program (Program), which will help to provide small businesses with emergency cash flow during this immediate health crisis. The deadline to apply is April 30, 2020. You can find out more here.
The City of Palm Desert has created a new Business Support Hotline, which will be staffed by experts from the City’s Economic Development Department. You can call (760)776-6362 or email email@example.com with your questions about how to access Federal, State, and County loans, grants, and other resources.
Frequently Asked Questions:
What is the process for hospitals, health systems and health care providers to apply for and receive funding under the 7(a) SBA Paycheck Protection Program?
- Non-profit organizations, including hospitals, health systems, and health care providers, are eligible to apply for the Small Business Administration’s Paycheck Protection Program.
- To be eligible, and 501(c)(3) non-profit organizations must have fewer than 500 employees, or more if SBA’s size standards for the non-profit allows. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.
What types of non-profits are eligible for the SBA PPP assistance?
- In general, 501(c)(3) and 501(c)(19) non-profits with 500 employees or fewer as most non-profit SBA size standards are based on employee count, not revenue. You can check here.
Who should I contact about the status of my application to the SBA?
- Contact our local Small Business Administration office by calling 714-550-7420 or visiting https://www.sba.gov/offices/district/ca/santa-ana
What type of assistance will independent contractors be eligible for?
- Refundable tax credits are available for independent contractors who would have qualified for coronavirus related paid leave if they were employees. IRS will be posting information soon on these credits on its website (https://www.irs.gov/), including information on how to claim these credits.
- 50 percent of certain self-employment taxes are deferred through the end of 2020.
- Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date.
- Independent contractors are also eligible for assistance through the Small Business Administration’s new Paycheck Protection Program and Economic Injury Emergency Grant Program.
Don’t see an answer to your question? You can read more here or contact my Palm Desert Office at (760) 424-8888.